[Federal Register Volume 64, Number 130 (Thursday, July 8, 1999)]
[Rules and Regulations]
[Pages 36782-36784]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-17238]
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DEPARTMENT OF THE INTERIOR
Minerals Management Service
30 CFR Part 227
RIN 1010-AC51
Change to Delegated State Audit Functions
AGENCY: Minerals Management Service, Interior.
ACTION: Final rule.
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SUMMARY: The Minerals Management Service (MMS) is amending its
regulations to allow States which choose to assume audit duties to do
so for less than all of the Federal mineral leases within the State or
leases offshore of the State.
EFFECTIVE DATES: August 9, 1999.
FOR FURTHER INFORMATION CONTACT: David S. Guzy, Chief, Rules and
Publications Staff, telephone (303) 231-3432, FAX (303) 231-3385, e-
Mail David.Guzy@mms.gov.
SUPPLEMENTARY INFORMATION: The principal author of this rulemaking is
Ms. Shirley Burhop, State and Indian Compliance Division, Royalty
Management Program (RMP).
I. Background
This rule amends regulations governing the delegation of royalty
management duties to States. Section 205 of the Federal Oil and Gas
Royalty Management Act of 1982 (FOGRMA), 30 U.S.C. 1735, gives MMS the
authority to delegate audit functions to States. Currently, 10 States
have entered into the delegation agreements authorized by Section 205.
Regulations in 30 CFR part 227 implementing the Federal Oil and Gas
Royalty Simplification and Fairness Act of 1996 (RSFA), Pub. L. 104-
185, as corrected by Pub. L. 104-200, expanded the duties that States
could assume. Those regulations at 30 CFR 227.101 prescribed that if a
State wanted MMS to delegate the audit function to the State, then the
State was required to audit all Federal mineral leases within that
State and all 8(g) leases offshore of the State. We intended that
States perform other delegable functions authorized by RSFA for all
leases within that State and in all 8(g) leases offshore of the State.
However, we do not believe it is either necessary or desirable in the
case of the audit function. Typically auditing is done on a sampling
basis, i.e. not all leases are audited.
This change allows States which are now delegated audit authority
under FOGRMA to continue that audit authority without significantly
altering their staffing, funding, or other operations. By removing the
requirement that they exercise audit authority over all Federal mineral
leases within the State, the States will again be able to work with us
in those cases where State resources do not allow the State to cover
their entire audit universe. Thus, the State will designate the limits
of its audit activity each year through an annual audit work plan. This
wording change will also enable the MMS to continue to assist a State
in its audit efforts when necessary.
II. Statutory Authority
Authority for this change is granted by FOGRMA, 30 U.S.C. 1735, as
amended by RSFA, Pub. L. 104-185, August 13, 1996, as corrected by Pub.
L. 104-200. Authority regarding solid mineral leases, geothermal
leases, and 8(g) leases is granted by Pub. L. 102-154.
III. Comments on Proposed Rule
The proposed rulemaking provided a 60-day public comment period
which ended April 12, 1999. MMS received comments from one oil and gas
trade association commenter during the comment period. We reviewed and
analyzed the comments pertaining to this final rulemaking, and did not
revise the language of the final rule. The specific comments are
addressed below:
Comment--Regarding the Analysis section of the proposed rule
preamble, the commenter questioned how a State could take on delegated
functions without adequate staffing or funding. The commenter stated
that ``the language in the proposed rule controverts the Delegation
regulations,'' as stated at 30 CFR 227.103.
Response--The final rule enables States to perform delegated audit
functions for some or all Federal leases within their State rather than
being required to assume responsibility for all such leases. Our intent
is to enable those States which face staffing and funding limitations
to take on delegated audit duties to the extent they can perform such
duties with available resources. Current regulations at 30 CFR 227.101
(1998) require a State to have the resources to audit its entire lease
universe in order to take on any delegated audit duties.
IV. Procedural Matters
Regulatory Planning and Review (E.O. 12866)
This document is not a significant rule and is not subject to
review by the Office of Management and Budget under Executive Order
12866.
(1) This rule will not have an effect of $100 million or more on
the economy. It will not adversely affect in a material way the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or tribal governments or
communities. Requesting States may incur additional costs for
delegation responsibilities. However, these direct costs will be fully
reimbursed by the Federal Government in accordance with their annual,
approved audit plan each year. This rule change does not require the
States to file any additional information or fees.
(2) This rule will not create a serious inconsistency or otherwise
interfere with an action taken or planned by another agency. States
with delegated audit authority must follow the policies of the
Department. States will coordinate their audit actions with the Bureau
of Land Management and MMS.
(3) This rule does not alter the budgetary effects or entitlements,
grants,
[[Page 36783]]
user fees, or loan programs or the rights or obligations of their
recipients. Audits of Federal leases within State boundaries will be
individually budgeted through an annual work plan proposal the State
prepares and MMS approves. This is a process we have used effectively
since 1985 and will continue under the rule.
(4) This rule does not raise novel legal or policy issues. We have
had authority to delegate audit duties to States since 1983.
Historically, States have audited as much of the Federal lease universe
as practical for each State and MMS audited the remainder. We expect
these circumstances of operation to continue under this rule.
Regulatory Flexibility Act
The Department of the Interior certifies that this document will
not have a significant economic effect on a substantial number of small
entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).
The major impact of the rule will be on State governments, which
are not small entities. There will be some effect on the oil and gas
companies which are subject to audit, as various audit staffs,
including MMS's Compliance Divisions, State delegations, and Indian
Tribal delegations, may now audit Federal and Indian leases located
within a particular State's boundaries. This is no change from the way
in which MMS and delegated States and Tribes have audited companies in
the past. As has been done in the past, MMS will continue to coordinate
audit efforts of the various entities which might be involved in any
particular audit in order to minimize disruptions to the companies
being audited.
Small Business Regulatory Enforcement Fairness Act (SBREFA)
This rule is not a major rule under 5 U.S.C. 804(2), the Small
Business Regulatory Enforcement Fairness Act. This rule:
a. Does not have an annual effect on the economy of $100 million or
more. States would initially incur the expense of delegated audit
functions and MMS would later reimburse them. The maximum economic
impact for audit delegation is estimated to be $5.5 million.
b. Will not cause a major increase in costs or prices for
consumers, individual industries, Federal, State, or local government
agencies, or geographic regions. The audit of Federal leases is not a
function which generates impacts on costs or prices to individuals or
areas. States will review royalty calculation and payments to enforce
existing Federal lease terms and royalty policies. States will conduct
the audits as efficiently and economically as possible in accordance
with Departmental policies.
c. Does not have significant adverse effects on competition,
employment, investment, productivity, innovation, or the ability of
U.S.-based enterprises to compete with foreign-based enterprises. The
laws providing for the delegation of audit duties, FOGRMA and RSFA, do
not provide for any other entity, except tribal governments, to conduct
these duties.
Unfunded Mandates Reform Act of 1995
This rule does not impose an unfunded mandate on State, local, or
tribal governments or the private sector of more than $100 million per
year. The rule does not have a significant or unique effect on State,
local or tribal governments or the private sector. The rule does not
change valuation requirements, impose additional royalty collections or
require new reporting forms. This rule merely gives State governments
the option to conduct audits and investigations on less than all of the
Federal mineral leases within State boundaries or section 8(g) leases
on the OCS. The Federal Government will fully reimburse States for the
costs they incur to conduct the audits and investigations in accordance
with the State's annual, approved audit plan. We expect those costs to
be no more than $5.5 million per year. County, local, or tribal
governments will not perform the delegable audit functions on behalf of
State governments; therefore, they will not be impacted by this rule.
A statement containing the information required by the Unfunded
Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.
Takings (E.O. 12630)
In accordance with Executive Order 12630, the rule does not have a
significant takings implication. States seeking audit delegation from
year to year will propose the level of effort they can expend auditing
Federal leases. This method of operation will give States first choice
in cooperatively planning annual work with MMS. This rule does not
represent a governmental action capable of interference with
constitutionally protected property rights. A takings implication
assessment is not required.
Federalism (E.O. 12612)
In accordance with Executive Order 12612, the rule does not have
sufficient federalism implications to warrant the preparation of a
Federalism Assessment. This rule allows States to continue to audit
selected leases within legal boundaries. It does not alter roles,
rights or responsibilities of States conducting delegated audits. A
Federalism Assessment is not required.
Civil Justice Reform (E.O. 12988)
In accordance with Executive Order 12988, the Office of the
Solicitor has determined that this rule does not unduly burden the
judicial system and meets the requirements of sections 3(a) and 3(b)(2)
of the Order.
Paperwork Reduction Act
This regulation does not require an additional information
collection approval under the Paperwork Reduction Act of 1995. There is
currently in place an approved information collection titled Delegation
of Authority to States, OMB Control Number 1010-0088, which expires on
June 30, 2000.
National Environmental Policy Act of 1969
This rule does not constitute a major Federal action significantly
affecting the quality of the human environment. A detailed statement
under the National Environmental Policy Act of 1969 is not required.
Clarity of This Regulation
Executive Order 12866 requires each agency to write regulations
that are easy to understand. We invite your comments on how to make
this rule easier to understand, including answers to questions such as
the following:
(1) Are the requirements in the rule clearly stated?
(2) Does the rule contain technical language or jargon that
interferes with its clarity?
(3) Does the format of the rule (grouping and order of sections,
use of headings, paragraphing, etc.) aid or reduce its clarity?
(4) Would the rule be easier to understand if it were divided into
more (but shorter) sections? (A ``section'' appears in bold type and is
proceeded by the symbol ``Sec. '' and a number heading; for example:
Sec. 227.101 What royalty management functions may MMS delegate to a
State?
(5) Is the description of the rule in the ``Supplementary
Information'' section of this preamble helpful in understanding the
rule?
(6) What else could we do to make the rule easier to understand?
Send a copy of any comments that concern how we could make this
rule
[[Page 36784]]
easier to understand to: Office of Regulatory Affairs, Department of
the Interior, Room 7229, 1849 C Street NW, Washington, DC 20240. You
may also E-mail your comments to this address: Exsec@ios.doi.gov.
List of Subjects in 30 CFR Part 227
Coal, Continental shelf, Geothermal energy, Government contracts,
Mineral royalties, Natural gas, Petroleum, Public lands--mineral
resources, Reporting and recordkeeping requirements.
Dated: June 19, 1999.
Sylvia V. Baca,
Acting Assistant Secretary--Land and Minerals Management.
For the reasons set out in the preamble, 30 CFR part 227 is amended
as follows:
PART 227--DELEGATION TO STATES
1. The authority citation for part 227 continues to read as
follows:
Authority: 30 U.S.C. 1735; 30 U.S.C. 196; Pub. L. 102-154.
2. Revise Sec. 227.101 to read as follows:
Sec. 227.101 What royalty management functions may MMS delegate to a
State?
(a) If there are oil and gas leases subject to the Act on Federal
lands within your State, MMS may delegate the following royalty
management functions for all such Federal oil and gas leases to you
under this part:
(1) Receiving and processing production or royalty reports;
(2) Correcting erroneous report data; and
(3) Performing automated verification.
(b) If there are oil and gas leases subject to the Act on Federal
lands within your State, MMS may delegate the following royalty
management functions for some or all of the Federal oil and gas leases
to you under this part:
(1) Conducting audits and investigations; and
(2) Issuing demands, subpoenas, and orders to perform restructured
accounting, including related notices to lessees or their designees,
and entering into tolling agreements under section 115(d)(1) of the
Act, 30 U.S.C. 1725(d)(1).
(c) If there are oil and gas leases offshore of your State subject
to section 8(g) of the Outer Continental Shelf Lands Act, 43 U.S.C.
1337 (g), or solid mineral leases or geothermal leases on Federal lands
within your State, MMS may delegate authority to conduct audits and
investigations for some or all such Federal leases.
[FR Doc. 99-17238 Filed 7-7-99; 8:45 am]
BILLING CODE 4310-MR-P
